Jones Apparel Group, Inc. v. Polo Ralph Lauren Corp.

A designer, manufacturer, and marketer of various types of fashion apparel, the Jones Apparel Group, Inc. (Jones) (plaintiff) sold clothing under recognized brand names like Jones New York, Evan-Picone, and Nine West. Jones entered into a series of four agreements (the Lauren agreements) with Polo Ralph Lauren Corporation (Polo) (defendant) for the exclusive right to produce clothing lines under several labels in the United States and Canada. One license agreement and one design-services agreement covered the United States, and one license agreement and one design-services agreement covered Canada. Each of the Lauren agreements allowed for its termination by Polo in the event of default by Jones and contained cross-default and cross-expiration provisions. The default or expiration of one type of agreement, license or design services, triggered the default or expiration of the other type of agreement. A default or expiration under the United States agreements triggered a default or expiration under the Canadian agreements, but not vice versa. Jones and Polo entered into new license and design-services agreements with the same provisions for a younger clothing line (the Ralph agreements). Jones and Polo signed a cross-default and term-extension agreement to compensate Jones for the risk associated with the new line by adding two years to the existing Lauren agreements. The Ralph clothing line was unsuccessful, triggering the cross-default and cross-expiration provisions of the license and design-services agreements. Polo argued that this scenario also triggered the cross-default and cross-expiration provisions of the Lauren agreements. Jones rejected this interpretation. Both parties commenced actions against each other. Polo sought a declaratory judgment that the Ralph and Lauren agreements would all terminate together and that all of the rights granted to Jones under the agreements would revert to Polo at that time. Jones contended that the cross-default and cross-expiration provisions of the time-extension agreement did not trigger the same provisions in the Lauren agreements.